Stocks: Money-Centers Lead the Charge as Banks Rack Up Another Day of

Bank stocks continued their forward march Wednesday as solid earnings news and declining interest rates continued to boost the sector.

The Standard & Poor's bank index, which had jumped 3.26% Tuesday, gained another 0.16% in Wednesday trading.

"There is a continued flow of mutual fund money into the market, and right now, with the losses in the technology segment, banks are looking good," said Anthony Davis of Dean Witter Reynolds Inc.

"Bank earnings relative to the market will hold up better this year," he added. "We are looking at 14% earnings growth this year for banks, while Dean Witter is forecasting 5% growth for S&P stocks."

Leading the advancers again were large money-center banks like Chemical Banking Corp., which reported strong fourth-quarter earnings on Tuesday and said it would sell its municipal bond business.

At an analysts' meeting Wednesday morning, the bank also increased estimates for the savings from its pending merger with Chase Manhattan Corp.

Chemical also increased the estimate on the deal's merger charge, but said it would not release either number until March. Chemical shares rose $1 to $59.50, after a $3.375 rise Wednesday.

"That meeting was well attended and well responded to," said Diane Glossman, a money-center analyst with Salomon Brothers. "The earnings of many of the banks have put to rest some of the concerns investors have had about consumer credit quality."

Mr. Davis also noted that net interest margins were better than expected at many banks. However, he cautioned against too optimistic an assessment, noting that loan delinquencies were still up at most banks.

Other money-centers that performed well were J.P. Morgan & Co., which rose $1.25 to $79.125; and Citicorp rose $1 to $69.25 after a 7% jump Tuesday.

Bank of New York Co. rose 62.5 cents to $47.125 despite Schroder Wertheim analyst James P. Hanbury downgrading the stock to "market perform" from "outperform."

Merrill Lynch & Co. regional bank analyst Sandra Flannigan downgraded Banc One Corp.'s long-term rating to "above average" from "buy," while maintaining the firm's intermediate-term "hold" rating. The stock fell $1 to $36.375.

First Union Corp. rose 62.5 cents to $55 after Interstate/Johnson Lane analysts John Mason and Christopher Marinac upgraded the bank from "neutral" to "buy."

The analysts said they were impressed with the company's consolidated yearend earnings, and raised their 1996 earnings estimate on the bank from $6.25 to $6.34 per share.

They also said most of the uncertainty surrounding the bank's merger with First Fidelity Bancorp. had passed.

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